Indian Rupee Hits Historic Low of 85.12 Against the US Dollar Amidst Aggressive Fed Stance
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New Delhi, Dec 19 (NationPress) The Indian rupee experienced a drop of 18 paise, hitting a historic low of 85.12 against the US dollar on the National Stock Exchange (NSE) as a result of the Federal Reserve's hawkish remarks concerning rate cut projections.
The recent U.S. Fed meeting, which took place on Wednesday, redirected its emphasis towards maximum employment and price stability, leading the FOMC to reduce the anticipated number of rate cuts for 2025.
Following the decision from the U.S. Federal Reserve, the dollar saw a significant rally, with the dollar index surpassing the 108 mark. This impact was not limited to the Indian currency but was also evident in various other foreign currencies.
The Indian rupee began the day on a weak note at Rs 85.06 against the dollar. Factors such as a soft trend in domestic stock markets, heightened demand for dollars from importers, and the withdrawal of foreign capital contributed to investors' sentiment.
On the previous trading day, the rupee closed at a record low of 84.94 against the U.S. dollar.
Experts noted, "The dollar index rising above 108 and the 10-year bond yield spiking to 4.52 percent are negatives from the perspective of FII fund flows. However, this is likely to be only a temporary situation."
In response to the U.S. Fed's decision, the Dow Jones fell by 2.58 percent to close at 42,326.87, while the S&P 500 dropped by 2.95 percent to 5,872.20 and the Nasdaq declined by 3.56 percent to finish at 19,392.69.
On December 18, foreign institutional investors (FIIs) sold Indian equities worth Rs 1,316.81 crore, while domestic institutional investors purchased equities valued at Rs 4,084.08 crore.
As the Indian stock market opened on Thursday, it recorded a decline. By around 01:14 PM, the Sensex was trading at 79,300.6, down by 881.51 points or 1.10 percent, while the Nifty was at 23,966.15, down by 232.70 points or 0.96 percent.
